Australia's trade surplus widened out to a very elevated $12.9bn in January, ending the period of narrowing seen over the second half of 2021. Export earnings lifted after their fastest pace since early 2020 and reached a new record high, likely with more to come.
International Trade — January | By the numbers
- Australia's trade surplus widened to $12.9bn in January from $8.8bn previously (revised from $8.4bn) and well above expectations for around $9bn.
- Exports accelerated by 7.6% to $49.3bn (23.6%yr); a record high level.
- Imports declined by 1.6% in January to $36.6bn (21.2%yr).
International Trade — January | The details
Since reaching a record high of $13.3bn in July, Australia's trade surplus retraced by $4.4bn to $8.8bn by December. Over the period, a fall in the ore iron price from elevated levels had weighed on export earnings while import spending had lifted. This narrowing trend was broken at the start of 2022 due to a resurgence in exports, widening the trade surplus back out to $12.9bn.
In January, export earnings surged by 7.6% — its sharpest month-to-month rise in almost 2 years — and to a record high at $49.3bn. This was driven by export goods, which saw a resurgence to be up 8.8% in the month ($44.4bn), while services exports were flat (-0.2%) and remained at a low level ($4.9bn).
The main contributor to the strength in goods exports was non-rural goods (10.4%). This came on the back of a sharp rise in iron ore (15%) and coal exports (16.7%); the former boosted by rising prices to continue its rebound from October's low, while the latter was supported by higher volumes. LNG exports fell in the month (-6.2%) but metals advanced (8%). Rural goods lifted by 7.3% to surge to a new record high at $5.8bn (46.5%yr).
On the import side, spending was down by 1.6% in the month to $36.6bn. Goods imports drove the contraction, falling by 2.5%m/m, as services imports were gradually rising (4.6%m/m) off their pandemic lows.
Both capital (-5%m/m) and intermediate goods (-3.2%m/m) moderated. The latter was coming off a record high in the month prior, with its surge in part reflecting the impact of price rises due to global supply chain pressures. Consumption goods lifted by 0.8%m/m to be around the level of spending seen prior to the Delta wave lockdowns in Q3 last year. Imports of vehicles remain on the improve from low levels after being held back by supply constraints.
International Trade — January | Insights
The trade surplus surged back around record highs to open 2022 as export earnings accelerated. Due to upward pressure on commodity prices following the war in the Ukraine, the trade surplus could remain around these elevated levels.